Understanding The Bankruptcy Process
In the United States, there are two types of bankruptcy for individuals. They are Chapter 7 and Chapter 13, which are detailed in the Bankruptcy Code.
When an individual declares Chapter 7 bankruptcy, which is also known as a “straight bankruptcy,” all of the assets of the debtor are sold. This is done by a trustee who is appointed by the bankruptcy court. Once these assets are sold, the trustee for the case will distribute the funds collected to the debtor. In some states, there are certain items that are exempt from being sold to satisfy debts.
After an agreement has been made with the bankruptcy court as to how the debts will be handled, the debtor is then protected from any contact from creditors either by mail, email, phone calls, or personal visits. If there is a creditor who had obtained a judgment against the debtor prior to the bankruptcy filing, they have the right to continue trying to collect the debt.
A Chapter 13 bankruptcy allows the debtor to make payments on his debts over a period of time, usually from three to five years. This is usually done with no interest or a lower interest amount than the debtor has been paying. Of course, the court must approve this plan.
This plan is often referred to as the “wage-earner’s bankruptcy.” Once the plan has been approved by the court, the creditors are required by law to accept it and abide by the repayment plan. A Chapter 13 bankruptcy protects the debtor from having his assets seized and from any further debt collection activity.
Once the debtor hires a lawyer to represent him in a bankruptcy proceeding, he will begin to experience some protection from his creditors; his lawyer will contact them on his behalf and explain that they need to work with him concerning any issues or concerns they may have, thereby relieving the debtor of much stress and anxiety.
If you are considering bankruptcy, why not speak with a professional and experienced lawyer today? Call 312-273-1217 from anywhere in the Chicago area to set an appointment today. It is completely free, so what do you have to lose?
By Kerrie Neal